Retail inflation hits multi-year low of 3.78% in July

New Delhi: Retail inflation fell to multi-year low of 3.78 per cent in July on account of cheaper food prices, including of vegetables, fruits and cereals.The retail inflation based on Consumer Price Index (CPI) was

New Delhi: Retail inflation fell to multi-year low of 3.78 per cent in July on account of cheaper food prices, including of vegetables, fruits and cereals.

The retail inflation based on Consumer Price Index (CPI) was at 5.40 per cent in June 2015. In July 2014, CPI basedretail inflation was as high as 7.39 per cent.

Food inflation measured on Consumer Food Price Index during the month of July 2015 fell to 2.15 per cent as against 5.48 per cent recorded in June 2015, the official data released today showed.

Prices of vegetables fell sharply during the month from a year ago, with inflation printing a negative 7.93 per cent.Fruits also turned cheaper by 1.45 per cent during the month compared to the same month last year.

However, prices of protein-rich items such as pulses remained higher as inflation rose to 22.88 per cent. Also,meat and fish prices turned costly by 7.02 per cent.

Inflation in cereals and products was at 1.06 per cent, eggs at 2.8 per cent, milk and products at 6.12 per cent and that for oils and fats was at 2.78 per cent in July 2015.

Among others, sugar and confectionery prices contracted by 12.30 per cent. Spices prices rose by 9.09 per cent, non-alcoholic beverages by 4.44 per cent, prepared meals, snacks and sweets by 7.7 per cent while that for food and beverages category by 2.89 per cent.

The fall of 3.78 per cent in consumer inflation was ”much below the expectation” and was due to drop in food prices, India Ratings & Research Chief Economist Devendra Kumar Pant said.

”It is contradictory to daily price data released by the government. July vegetable prices has declined by nearly 8 per cent. This will have a favourable impact on bond pricing and increase in probability of monetary easing,” he said.

Crisil Chief Economist DK Joshi said the fall in inflation was a surprise on the positive side.”Inflation is better than expected. However, the fall in inflation is a surprise on the positive side. For RBI's next move, it makes the chances favourable and I think it would like to watch before going for rate cut,” Joshi said.

Inflation in fuel and light category stood at 5.36 per cent, housing at 4.44 per cent. Transport and communication prices fell by 0.35 per cent. Inflation for rural segment was 4.44 per cent in July (from 6.07 per cent in June) and that for urban sector was at 2.94 per cent (as against 4.55 per cent in June), the data showed.